TRADING TIPS

ADX Trend vs. Chop

Hubert Senters here. Let’s go over how to properly use the ADX. As we are seeing here we’ve got the ADX down here on the 30 year on. And here is the general rule of thumb that I use. And there’s plenty of different ways that you can use this but strategically I believe bonds are going lower. Tactically, I need to short them at areas of interest to increase my percentage and the number of times that I can short them and hold them without getting wiggled out of them. So in this case you can see that the ADX, this yellow line when it goes below the green line, when it turns red and it says “this is a non-trending market at that point.” Anytime, it’s above 20 it will turn yellow. So, I am going to zoom this up a little bit. As you can see it bounced off the lows here, and it started going back towards 20. But it’s not to 20 right now. So as I was shorting it up in these areas on these bounces I was getting wiggled out of it. I’ve got one and I’m trying not to get bucked out of it. Now, if I compare the 30 to say the 10-year, the 10-year has been a lot easier on me because it has been trending a little bit better than the 30. I’m going to show you what that looks like in real world. This is the 10-year note. Currently right now we have a risk on this trade of $78.13. And I have an open target on it and I’m looking to make it at least $2,000 on the trade. Currently I’m only up $562. On the 30-year contract which I’m shorter lower and haven’t been in it as long. I’m up close to double that and at one point I was up $1,281 right now, I’m only up $1,125. The risk is $156. So here’s the risk of $156 and later on this evening I’ll bump that down a little bit but I don’t want to choke it to death. So these things close in about 15 minutes. One thing I don’t want to do is go like this and bring this stop all the way down here and just choke that trade up. That’s not what you want to do. You want to give it enough breathing room that it can marinate in the volatility and potentially print you off some more profits. Good luck. Hope it helps. See you on the next video. Hubert.    

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